HONov10 - Economics 201, Witte, Thursday, November 10, 2005...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 201, Witte, Thursday, November 10, 2005 I will be in my office (Andersen 311) Monday 3-5 and Tuesday 2-4 to discuss the exam. If those don’t work for you, let me know and we’ll find another time. No quiz this week, but there was an erroneous Aplia quiz “Money & Banks II”, which some of you missed. If you did it, you learned extra, if you didn’t, no problem it doesn’t count. The announced quiz was “Money & the Banking System II”, which hopefully you did and aced. Krugman & Wells: Some of the PDF files on line are print protected, so I had them send us chapters 16-18, and Chapter 19 is printable online. Get it at www.worthpublishers.com/krugmanwells , then to the “Krugman/Wells Preview Site”, then to the “Sample Chapters” and Chapter 19 is at the bottom. CUMULATIVE Final Exam: Thursday, December 8 th , 3:00-5:00. Bring Wildcard, calculator, and an 8.5 by 11 inch note-sheet on which you can put whatever notes you think will be helpful. The final will resemble the recent old midterms more than it will the old final exams I’ve posted. It’s worth 45% of your grade, but big improvements will be noted in this calculation. Business Bootcamp Sunday. Details on Courses/Blackboard in Course Documents Monetary Policy I. Money has three classical roles: Transactions, assets, unit of account (but this last one isn’t so important) II. By changing the monetary base and thereby the money supply, the Fed changes the amount of transactions balances, and the supply of credit for investment purposes III. Real short run macroeconomic effects IV. Long run effect: Likely only inflation. Fisher Equation: i = r + Expected inflation V. Radford & Sweeneys: Transactions and store of value demand for money The Phillips Curve, Recessionary and Inflationary Gaps I. Inflationary and Recessionary Gaps – Equilibria away from potential GDP, Full Employment.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
a. Inflationary Gap: Economy in equilibrium with GDP > Potential GDP, Unemployment < Full Employment (as in 3% < 5%). i. Cure via economy’s “Self-Correcting Mechanism” means that eventually the low unemployment will force up wages faster than productivity, raising costs of production, and thus shifting AS to the left. This will lower output, raise unemployment, and increase inflation. ii. Curve via activist policy means raising taxes, cutting government spending on goods and services, and reducing investment demand through monetary policy, this reduces AD via the spending multiplier. This lowers output, raises unemployment, and puts downward pressure on inflation. b. Recessionary Gap: Economy in equilibrium with GDP < Potential GDP, Unemployment > Full Employment (as in 10% > 5%). i. Cure via economy’s “Self-Correcting Mechanism”
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 9

HONov10 - Economics 201, Witte, Thursday, November 10, 2005...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online